ACA To FCC: End Joint Retrans Bargaining

In a new letter, more than two dozen executives from American Cable Association member companies called on the FCC to take action against TV stations that are engaging in what ACA called “anticompetitive coordination designed to extract excessive retransmission consent compensation from pay-TV providers as compared to other broadcasters that negotiate individually.”

The letter charged that in dozens of second- and third-tier markets around the country, separately owned, same-market Big 4 TV stations are coordinating their retransmission consent negotiations by relying on a single representative or a third-party retained by both stations to present a united front at the bargaining table with ACA Members.

“No matter how the coordination is done, there is competitive harm,” ACA President-CEO Matthew M. Polka said. “When two non-commonly owned Big 4 stations in a single market coordinate their retransmission consent negotiations, what little bargaining power ACA Members have to secure retransmission consent at fair market value is materially reduced.”

The ACA Members’ letter asks the FCC to take action against broadcasters in connection with the agency’s pending Quadrennial Media Ownership review. As part of this statutory review, ACA said it has documented 48 instances in 43 different markets of Big 4 broadcasters coordinating their retransmission consent negotiations, helping to drive up the cost of retransmission consent by at least 22% above the level of payment each station would have received had it negotiated on its own.

ACA said the letter, sent Feb. 4 to FCC Chairman Julius Genachowski, represents further efforts by the independent cable community to draw attention to, and seek action about, “a widespread and increasing TV industry practice that is distorting normal competitive conditions in local broadcast markets, artificially driving up the fees paid by TV providers for retransmission consent rights, and, in the process, injuring millions of consumers served by ACA Member companies and others.”

The letter was signed by ACA’s largest members as well as smaller ones. The ACA members said that by speaking up, they are “running the risk of business retaliation during their next round of negotiations from TV stations fearful that their efforts to coordinate their retransmission consent negotiations will be deemed unlawful.”

“At the risk of retribution from the broadcasters who are engaging in this anti-competitive practice, a substantial number of ACA members have reached out to the FCC in their letter in the hope that doing so will persuade the FCC to address this issue as part of the Quadrennial Media Ownership review,” Polka said.

The cable executives urged the FCC to recognize that coordinated retransmission consent negotiations on the part of separately owned, same market TV stations create an attributable ownership interest under its local TV ownership rule. That rule, among other things, prohibits the ownership of more than one of the four-highest-rated stations in any local TV market.  Action by the FCC adopting this proposal would allow ACA members facing coordinated negotiations by separately owned Big 4 stations in a single market to rely on the duopoly ownership prohibition in filing an FCC action against the coordinating stations.  It would also permit the FCC to bring enforcement actions on its own.

Every four years, the FCC is required to take a fresh look at its media ownership rules in order to determine whether they will serve the public interest goals of competition, localism and diversity going forward.

“The FCC’s challenge is to adapt its rules to ensure that they promote pro-competitive values in the current marketplace and into the future. The fact that separately owned, same market Big 4 broadcasters can secure higher retransmission consent fees by coordinating their negotiations is strong evidence that broadcasters engaging in this practice are reducing competition in their local markets compared with broadcasters that are not coordinating their negotiations,” Polka said.